Egypt floats African partnerships in energy sector

Egypt has expressed willingness to collaborate with African nations to process more of the continent's natural resources within the region, according to Karim Badawi, the Minister of Petroleum and Mineral Resources. Speaking at an energy session during the Alamein Africa Forum in Egypt last week, Badawi emphasized the need to move beyond traditional raw material exports and develop infrastructure, skills, and financing for integrated value chains.

Egypt's refining, petrochemicals, port, pipeline, and LNG facilities could serve as a foundation for enhanced African cooperation, connecting producers with markets in Europe, the Middle East, and beyond. Badawi stressed the importance of building the capacity to process more of their resources, expanding the industrial base, and linking producers with consumers across the continent and beyond.

This approach aims to retain a larger portion of value within Africa's energy value chain through refining, blending, storage, transportation, and the production of higher-value-added petroleum products. Egypt also plans to extend its technical capabilities across the continent, with Egyptian petroleum companies already operating in countries like Libya, Algeria, Nigeria, and Angola.

However, high project costs are hindering Africa's energy resilience, according to Edu Okeke, CEO of pan-African energy company Azura Power. Okeke highlighted that Africa's policymakers must focus on reducing power production costs and accelerating project completion times. He cited Nigeria as an example, where it took six years to develop a power project, and emphasized the need for the continent to add 1,000MW of power annually for sustainability.

Okeke pointed out that gas-fired power plants in Africa are about $1.5 million per MW more expensive to build than in other regions, making Africa the most expensive market for power generation. Vanessa Baldwin Mushi, CEO of CATA Energy, noted that political pressure to keep electricity tariffs low makes attracting private investment into Africa's power sector challenging.

The pressure to maintain low tariffs can prevent projects from reaching financial closure, as the economics may no longer support investment. Mushi suggested that closer coordination between governments and the private sector is necessary to develop cost-reflective tariffs, while acknowledging that subsidies can protect consumers but should be targeted rather than achieved by suppressing tariffs.